|SWorld capacity decisions will also likely
be influenced by what occurred in 2004.
While world refining capacity in 2004 was not run at its total
limit, utilizations have increased because demand has been rising faster than
capacity. The Asian capacity
surplus has largely disappeared, with a few exceptions such as Japan. China and India are straining to build
capacity to keep up with demand growth.
|SThere is much activity emerging to increase
capacity in Asia as well as in the Middle East. The players include national oil companies,
integrated majors, and producing
countries in the Middle East. The
producing countries are discussing adding refining capacity both in their own
regions as well as in Asian countries.
|SThe concern remains if the expansion
projects will reach completion in time to avoid an exceedingly tight balance,
with large price increases ultimately having to balance the market.